Crop Insurance
Overpayment of Claims by Private Companies Costs the Government Millions Gao ID: RCED-88-7 November 20, 1987Pursuant to a congressional request, GAO examined the Federal Crop Insurance Corporation's (FCIC) oversight and control of the loss adjustment practices of private reinsured companies.
GAO found that reinsured companies: (1) did not adjust 95 percent of 134 sample claims in accordance with FCIC policies and procedures; (2) should not have paid about 31 percent of the $9.4 million in claims; (3) may have intentionally overpaid claimants; and (4) made incorrect determinations of production guarantees, actual production, payment amounts, and program eligibility. GAO also found that FCIC: (1) improperly adjusted 62 percent of 37 sample claims; and (2) overpaid about 1 percent of those claims. In addition, GAO found that FCIC: (1) did not properly manage the loss adjustment processes of reinsured companies; (2) had inadequate oversight and control over such companies; and (3) did not screen reinsured claims for obvious errors, but recently began to systematically review the operations of reinsured companies.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
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